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Leaders say Oklahoma is OK
Oklahoma is doing fine in the current financial crisis, according to local financial leaders.
“Our banks are extremely solid,” Claremore businessman Frank Robson said Tuesday.
Oklahoma may not be feeling the same pinch others are feeling in the nation. Robson said the economic meltdown of Wall Street has not reached the Sooner State.
“It’s not true in Oklahoma. It’s not true on Main Street in Claremore, Okla. We’re still making car loans, we’re still making business loans, we’re still making real estate loans,” Robson said. “Our financial institutions here are taking care of the business needs.”
Robson’s father, L.S. Robson, joined with other local businessmen in 1936 to launch Rogers County Bank (now RCB) during the Great Depression.
Today, RCB Holding Co. has a number of locations in northeastern Oklahoma, in addition to banks in Ponca City and Oklahoma City. RCB has grown from $30,000 in assets to $1 billion in assets.
Robson remembers the economic downturn of 1983 following the collapse of Penn Square Bank in July 1982.
Oklahoma Treasurer Scott Meacham, speaking in Claremore on Tuesday, said the Penn Square failure is not unlike the situation facing America today. Both are a result of “speculation and over-reaching,” Meacham said.
The fall of Penn Square had a definite regional impact, but banks throughout the U.S. had purchased loans from Penn Square and ripples were felt across the nation.
Penn Square aggressively sought large, speculative loans, and sold them to some of the premier banks in America. Most of those loans were in the oil and gas industries.
According to the Federal Deposit Insurance Corporation, “Penn Square became the largest bank failure in the FDIC’s history in which unisured depositors suffered losses.”
In the FDIC analysis of the Penn Square failure, deregulation was named as a contributory factor.
“The FDIC believes deposit brokering became a problem following the enactment of the Depository Institutions Deregulation and Monetary Control Act of 1980. That statute provided for eliminating restrictions on interest rates paid on deposits. That same year, Congress raised the deposit insurance limit to $100,000,” according to material published by the FDIC.
High interest rates through deposit brokers allowed Penn Square to overextend to the point of no return, according to the FDIC.
The current crisis is related to mortgage-backed securities, but the scenario is familiar.
LOCAL LEADERSHIP RESPONSE
U.S. Sen. Jim Inhofe (R-Okla.), who voted against the bailout bill Wednesday night, said Americans deserve answers and a proposal that includes “accountability, transparency, and Congressional oversight.”
“We must find a way to address the financial situation as soon as possible,” Inhofe said Wednesday before the vote. “Congressional leaders must be mindful, however, that for legislation to pass through Congress, it must have the support of the American people. It is the American taxpayers, after all, that are being asked to bail out Wall Street.”
State Sen. Andrew Rice of Oklahoma City, the Democratic nominee for U.S. Senate, said Congress should strengthen the financial bailout plan to “ensure that Wall Street faces consequences for reckless investments.”
Rice said his talks with employees at American Airlines revealed “a lot of anger across Oklahoma.”
Inhofe said: “Constituents and business leaders here in Oklahoma continue to tell me they are hesitant to pay for the mistakes made by those on Wall Street. I appreciate their concerns and will continue to work with my colleagues to support a solution that makes sense for Main Street as well as Wall Street.”
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